Oct 19, 2001 : The webhost industry: week review

📅 October 19, 2001 - Earnings season is upon us, and there was no shortage of reports from companies detailing a variety of results.
The reports, coupled with renewed fears of terrorism abroad and at home, sent the Nasdaq on an up-and-down week that saw gains early in the week, only to be wiped out by Wednesday.
The Nasdaq was down 21.45, or 1.30 per cent, early Friday afternoon.
Investors were treated to earnings reports from a number of major tech players this week, including Intel, IBM and Sprint.
Intel said earnings fell a whopping 77 per cent, but still managed to please analysts and investors by meeting expectations. IBM also reported lower earnings, but still exceeded estimates slightly and re-iterated that the company was still on track to meet fourth quarter profit estimates. The global tech firm also said its Web hosting business had seen revenues grow by 50 percent year to year, and had signed $1.7 billion in new hosting customers during 2001, or about double the amount a year ago.
Sprint Corp posted a Q3 loss Wednesday, and said it would scrap its expensive high-speed network and cut 6,000 jobs, or seven percent of its workforce, in an effort to reduce costs. The service, named ION (Integrated On-demand Network) allowed customers to make phone calls, send and receive faxes, and surf the Internet over the same telephone connection.
Investors did not react well to the news, and shares have lost close to four dollars in value this week. Sprint is currently trading at $20.05.
The company's E | Solutions division also announced the opening of its new 100,000 square foot data center in Atlanta, the company's seventh.
Also reporting this week was voice and data firm Broadwing Inc. who released their earnings Tuesday. The company reported a net loss of $0.14 per share for the quarter compared to a loss of $0.19 per share a year ago. Shares in the company fell about two dollars on the news, and Broadwing was trading at $9.61 Friday morning.
Of course, there was also plenty of news that wasn't related to earnings from the Web hosting sector this week.
XO Communications announced a major strategic relationship this week with Microsoft that will see XO become the software firm's private label hosting provider for Microsoft's 1.6 million users of bCentral, its small-business portal. The relationship also includes future plans to integrate bCentral services into XO's local, long distance, Internet and Web hosting services that are offered on a single telecommunications bill.
Investors took this as a very good sign for XO, and sent shares in the company well above the dollar mark for the first time since last month. XO shares were trading at $1.39 in late morning activity Friday.
Keeping with Microsoft for a moment, network software firm Novell said this week that Microsoft has agreed to retract marketing material at the center of Novell's false advertising lawsuit filed Oct. 1 against the company Microsoft allegedly sent marketing material to Novell customers claiming the company's software would become obsolete as the company shifted its focus to consulting services.
Microsoft reported strong sales in its earnings report Friday but was down $1.10, or 1.94 percent, to $55.65 Friday afternoon.
North of the border, Canadian communications firm TELUS said Monday it had successfully completed the purchase of now-defunct PSINet's Canadian operations and facilities. The company had signed an agreement with to purchase parts of PSINet's assets for approximately $77 million in June, and the deal was approved last month. Through the purchase, TELUS gains approximately 250 employees, a Toronto data center, 6,400 kilometers of fiber, more than 50 points of presence and over 8,000 corporate accounts across the country.
Looking ahead to next week, keep an eye open for earnings from a number of major tech players, including managed hosting firm Digex. With markets still unsure of themselves because of the situation in Afghanistan, however, we can likely expect continued volatility in upcoming trading sessions.